Wizz plans raid on Thomas Cook slots as profits gain altitude

WIZZ AIR is eyeing up planes and landing slots owned by its beleaguered rival Thomas Cook after bucking a downturn in the airline sector to post higher profits.

József Váradi, Wizz chief executive, said, while his firm was not interested in buying Thomas Cook’s airline outright, it could be interested in some of its assets should they become available.

The tour operator put its airline on the block in February as it battles to reverse big losses elsewhere.

Wizz said it was “optimistic” over profit growth but warned of rising costs and “challenging” conditions in the industry.

The Budapest-based carrier, which operates in 44 countries, posted a 4.5pc rise in pre-tax profit to €300m (£266m) for the year to March. It expected net profits to be between €320m and €350m for the current financial year, up from €292m, with passenger numbers set to reach 40m.

The optimistic forecast came despite operating costs leaping 23pc to €2bn in the year to March, weighed down by a 19pc rise in fuel costs to €667m.

Wizz lowered full-year profit guidance in November, blaming rising fuel prices, air traffic control disruptions over the summer and airport congestion. The airline – the biggest in central and eastern Europe – reported that annual revenues rose a fifth to €2.3bn with 35m passengers carried last year, a 16.7pc increase.

Mr Váradi praised a “solid performance given the absence of Easter traffic which fell into the end of the last financial year, higher fuel prices and a challenging operating environment across the industry”.

He recently told The Telegraph that demand from Britain was “pretty strong ... we are very upbeat on the UK”. Wizz’s capacity on UK routes has risen by almost a third since the Brexit vote and it flies to nine British airports.

Wizz now accounts for more than 40pc of capacity at Luton Airport after opening its base in 2017. The carrier said it would offer more seats from Luton than any other airline by this summer, overtaking easyjet.

The airline listed in London in 2015 after a failed attempt the year before, valuing the company at about £600m. It has grown rapidly since and is worth £2.2bn. Wizz shares closed down 2.3pc at £31.34 yesterday.

Analysts at RBC said in a note: “We see inflationary labour cost pressures likely to continue – and beyond industry labour inflation cycles, Wizz (as expected) continues to face cost pressures from the higher [central and eastern European] GDP growth.”

Wizz has 112 aircraft in its fleet, including 14 from the new Airbus A321 family, which can carry up to 239 passengers and use 16pc less fuel than the A320 range.

Mr Váradi said introducing the A321 into the Wizz roster was “one significant factor that ... gives us a competitive advantage” over rivals.

“By the end of 2019 we will have every second seat on an A321,” he said. “We are crossing the line on our unit cost with Ryanair and it is because of the A321. By engineering design, the more seats you get out of an aircraft, the lower the unit cost it will produce.”